If you snoozed through biz org class in law school thinking that you weren’t going to be a transactional lawyer, perhaps you better go back and brush up on the law of agency. That’s what snagged Universal Music Group and its related company, UMG Recordings. That, and the pressure to get the deal done.

Artists Fabolous and Swizz Beatz used plaintiff Luar Music Corp.’s copyrighted work “Dale Don Dale” in a remix that was created as a work made for hire for UMG Recordings. Gustavo Lopez of UMG Recordings sent the remix to Luar’s president, Raul Lopez, telling Raul to “listen and call me.” Gustavo testified that “upon hearing the remix, Mr. [Raul] Lopez expressly gave me his consent to use and distribute the record.”

In house counsel for UMG Recordings, Jeffery Koenig, sent a draft contract to Gustavo and Raul. Koenig then sent a revised version to Luar’s attorney, Patricia MacMurray. Koenig asked MacMurray to have Luar’s authorized signatory execute five copies of the agreement. MacMurray responded that she had sent it for “Luar’s signature,” then on a follow-up responded that she had sent the documents to Raul to sign but he was out of the office. Koenig responded with an email saying:

Until we receive the signed paperwork, for the avoidance of doubt, this e-mail shall confirm that Luar Music approved of Universal’s re-mix of “Dale Don Dale” and granted Universal the right to exploit this re-mix in the manner described in the re-mixer agreement (and that Universal is proceeding in reliance herein).

MacMurray responded “OK.” The contract was never signed but UMG Recordings nevertheless went ahead with distributing the remix as “Reggaeton Latino.”

An exclusive license must be in writing and signed by the copyright owner or the copyright owner’s “duly authorized agent.” 17 U.S.C. § 204(a). Defendant Universal claimed that it had an exclusive license, based on the draft contract and the email. But MacMurray wasn’t a “duly authorized agent”:

There is no evidence in the record that indicates that MacMurray was ever vested, orally or otherwise, with the authority to grant licenses for copyrighted material owned by Plaintiff. Rather, according to Raul’s unsworn statement made under penalty of perjury, Raul who did not sign the Re–Mixer Agreement, the Revised Re–Mixer Agreement or any other relevant document, was Plaintiff’s only authorized signatory.

Defendants argue that Plaintiff is estopped from denying that MacMurray was duly authorized to grant licenses because MacMurray held herself out as Plaintiff’s agent. However, the record belies this contention. The Court finds that there is no indication that MacMurray held herself out as Plaintiff’s authorized agent. To the contrary, the emails exchanged between Koenig and MacMurray show that Koenig was well aware that MacMurray was not Plaintiff’s duly authorized agent. Koenig emailed MacMurray the Revised Re–Mixer Agreement and asked MacMurray to have “an authorized signatory of Luar Music sign in the appropriate indicated space.” Further supporting this conclusion is MacMurray’s response as she told Koenig that she sent the documents “over for Luar’s signature.” A few days later, Koenig asked Macmurray if she “received the signed documents from Raul.” MacMurray responded that Raul has been out of the office and has not been able to sign the Revised Re–Mixer Agreement. This email exchange demonstrates that neither Koenig nor MacMurray considered MacMurray to be Plaintiff’s duly authorized agent. Nevertheless, despite not having Raul’s signature, Defendants chose to release Reggaeton Latino. Thus, the record indicates that Koenig knew that Raul was the only person capable of granting an exclusive license and as a result Plaintiff is not estopped from denying that MacMurray was its duly authorized agent.

All is not lost yet; the court found that there was a question of fact on whether the plaintiff had granted a nonexclusive license, which can be given orally or implied through conduct.

So you in house lawyers, how many times, in the pressure to get a deal done, have you thought “oh, the email is good enough,” or “maybe they aren’t an agent, but at least they’re an apparent agent”?

There was another distribution in Mexico, so there’s also some stuff in the decision about extraterritorial application of the Copyright Act.

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Ms. Chestek is admitted to practice in Connecticut, the District of Columbia, Massachusetts, New York and North Carolina and is Board Certified by the North Carolina State Bar's Board of Legal Specialization in Trademark Law.

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